What is the current growth rate for the firm

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Y plc pays out 60% of its annual earnings as dividends to its shareholders. It has just paid a dividend of 50p for each of the 100 million shares that it has in issue.

The total market capitalization of the firm currently stands at ?400m. The firm has been highly profitable in recent years maintaining a return on equity (ROE) of 25%.

(a) What is the current growth rate for the firm?

(b) Outline the key problem involved in trying to empirically test the capital asset pricing model.

Reference no: EM131824191

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